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BACKGROUND Happy Valley Specific Plan (HVSP) In 1998, the City adopted the Happy Valley Specific Plan (HVSP), which guides future planning in an 860-acre area that includes both incorporated and unincorporated land. The HVSP area also includes a municipal golf course (Callippe Preserve Golf Course) that opened in 2005, open space and agricultural lands, as well as land for development of low-, medium-, and semi-rural-density homes. Since adoption of the Specific Plan, the most significant new development of the area has occurred in conjunction with the Callippe Preserve Golf Course and associated custom home lots, the majority of which have now been constructed. Other development has comprised smaller rural residential subdivisions, with the Spotorno property as the major remaining development area. The HVSP established planning policies, programs, and regulations for development decisions in the HVSP area. The HVSP and its environmental impact report (EIR) were prepared concurrently, allowing mitigations for many environmental impacts to be incorporated into the specific plan. The HVSP provides planning regulations including, but not limited to, those related to land use, density, circulation, open space, and infrastructure. Land Use and Housing Units The Spotorno family owns several parcels within in the HVSP area. The proposed project is located on Lot 98 per the HVSP, and is generally referred to as the Spotorno Flat Area. The project site comprises both Semi-Rural Density Residential (SRDR) Subarea (approximately 33 acres of the project site) and Agriculture/Open Space (AG/OS) land use and zoning designations (on the remaining 78.86 acres). The HVSP allows a maximum of 22 residential lots' in the Spotorno Flat Area with major dedication of open space land or agriculture/open space easements to the City. Figure 1 shows the location of the Spotorno lots and the HVSP land use designations within the project site. ' The HVSP states that fewer homes may be determined necessary by the City,based upon a detailed evaluation of individual site constraints Page 3 of 18